According to Lawrence Yun, chief economist of the Chicago-based Realtors’ group “The rising home foreclosures that sell at discounted prices are flooding the real estate market and depressing property values.Kelly Media Group, Founder Jason Cardiff weighed in, “Home sales will rebound strongly if we can keep the interest rates low for the next 12 months, but the trend of rates seems to be increasing.”Many realtors and mortgage brokers seem to agree that industry needs to keep conventional mortgage rates low until the local and national c can recover.

Existing U.S. home sales in May rose 2.4 % to an annual rate of 4.77 million, lower than forecast, and the median price was down 16.8 % from the same month in 2008, according to the Realtors. It would take about 9.6 months to sell the nation’s 3.8 million unsold homes at the current sales pace, according to the Realtors.“The worst is behind us but we’re a long ways off from a recovery in housing,” said Mark Vitner, a senior economist at Wachovia Corp. in Charlotte, North Carolina. “Inventories are still elevated. We’re not expecting any strength in housing until the second half of 2010.”About 20.4 million of the 93 million houses, condos and co- ops in the U.S. were worth less than their loans as of March 31, according to Seattle-based real estate data service Zillow.com.

Home Builders Continue to Struggle

Builders including Los Angeles-based KB Home are slashing prices and reducing the size of houses to compete with foreclosures. KB Home’s revenue fell 40 % last quarter to $384.5 million and net orders dropped 31 % to 2,910 homes, the company said June 26. The Washington-based Mortgage Bankers Association’s loan survey, compiled every week, covers about half of all U.S. retail residential mortgage originations.

Real estate news continues to dominate main stream media because of the housing sales slumps, foreclosure crisis and historic mortgage rate cuts.The Existing Home Sales release will be released soon from the National Association of Realtors and the Department of Housing and Urban Development. The Commerce Department will also release a report with new home sales data. These three reports should help the experts measure the strength of the housing sector and home loan credit demand, however, neither consider to be of high importance. Both of the reports are expected to show a decline in sales.

In a recent article, Kelly Media Group President, Jason Cardiff said, “2009 may see the housing sectors and mortgage refinance markets rebound after all.”Cardiff continued, “The Federal Reserve showed their commitment with record low rate cuts to fight deflation and many believe the President Elect, Barrack Obama will be aggressive in an effort to stem the foreclosure mess.”HUD continues to release new FHA loan products that offer solutions for mortgage refinancing with Hope for Homeowners and FHA Secure.FHA continues promoting rehabilitation and home remodeling to foreclosed home-buyers with the 203k rehab loans.FHA actually insures rehabilitation mortgages for owner-occupants and non-profit housing providers who finance the rehabilitation of an existing property or the purchase and rehabilitation of a property.

The Federal Reserve continued with their rate cutting campaign that promotes home financing and lending directly to damaged financial markets and companies. Its statement Tuesday came with a promise to extend those efforts.“The focus of the Committee’s policy going forward will be to support the functioning of financial markets and stimulate the economy through open market operations and other measures that sustain the size of the Federal Reserve’s balance sheet at a high level,” the Fed said.

Two large Federal lending programs are still being ramped up. In one, the central bank will buy up to $600 billion of debt issued or guaranteed by Fannie Mae, Freddie Mac and other government-backed mortgage businesses. So far, the Fed has only committed $8 billion to purchasing bad credit home loans. Officials have been relieved that mortgage rates have come down since announcing the program.

According to HSH Associate, mortgage rates for conforming thirty year home loans dropped from 6.64% to 5.28% since the Fed’s last meeting, a financial publishing firm. It has been one of the few areas in financial markets where credit costs have shown substantial improvement in the past few weeks.“Over the next few quarters the Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand its purchases of agency debt and mortgage-backed securities as conditions warrant,” the Fed said.

Fed officials have high expectations for a separate program through which they will lend up to $200 billion against high-rated securities backed by car loans, student loans, credit-card debt and small-business loans.U.S. officials have said the program, which is called the Term Asset-Backed Securities Loan Facility and is expected to be operational in February, can be expanded to other asset classes — such as commercial real estate loans or mortgages not backed by Fannie Mae and Freddie Mac.FHA loans also got a boost from the Fed’s rate reduction, as FHA mortgage executive, Jeff Moran said, “FHA mortgage applications have surged since last week.”Moran continued, “Our lending office alone saw a 35% increase new loan application volumes, compared to the previous week.”

The latest housing data underscored the grim economic setting. The housing downturn is now more than three years old. “November’s report for new home production and permit issuance indicates not only that conditions aren’t improving in the housing market, but that the situation is getting worse,” said David Crowe, chief economist with the National Association of Home Builders.Real estate news in 2008 has been mostly negative amid the foreclosure crisis and stock market slide.Kelly Media Group President, Jason Cardiff spoke to reporters in Toronto today as the rate cut news hit the wires.Cardiff said, “The Federal Reserve has made their move to lower mortgage rates to these historic levels.Now struggling American homeowner who have been waiting on the sidelines to refinance can now jump into the game.”Cardiff continued, “Let’s take a moment for have a round of applause…Fixed rates at 5% is good news for American homeowners.”

The Federal Open Market Committee had downgraded its unemployment and economic growth projections at its last meeting on October 29th and things have only gotten worse since then. The unemployment rate, at 6.7% in November, was already above the Fed’s October forecast for the fourth quarter and looks sure to go higher still.

Economists at Macroeconomic Advisers LLC, a forecasting firm, say the nation’s gross domestic product is on track to contract by 6.5% in the current quarter. If they’re right, it will be the worst quarter since 1980.“Since the Committee’s last meeting, labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment and industrial production have declined. Financial markets remain quite strained and credit conditions tight,” the Fed said.

The recent decline in mortgage rates could help revive housing markets. Federal Reserve officials also are focused on reducing other interest rates relative to Treasury benchmarks, a difference that is known on Wall Street as a ’spread.’ Across a wide-range of consumer lending, spreads have remained painfully high since September, a sign of tight credit conditions.